Bank Guarantee | Court of Appeal Allows Injunction

The NSW Court of Appeal on 1 November 2010 in Lucas Stuart Pty Ltd v Hemmes Hermitage Pty Ltd [2010] NSWCA allowed an injunction preventing a call upon the performance bond because of the possible likely damage to the contractors’ reputation and financial standing. There will be significant implications for businesses seeking to terminate contracts for a ‘material breach’.

rrrs & Associatess Associates Resolute Lawyers & Associates BANK GUARANTEE BANK GAURANTEE | COURT OF APPEAL ALLOWS INJUCTION The NSW Court of Appeal on 1 November 2010 in Lucas Stuart Pty Ltd v Hemmes Hermitage Pty Ltd [2010] NSWCA allowed an injunction prevent-ing a call upon the performance bond because of the possible likely damage to the contractors’ reputation and financial standing. There will be significant implica-tions for businesses seeking to terminate contracts for a ‘material breach’. Notice issued under Clause 16.2 of the contract required Lucas Stuart to remedy the non-compliance and further stated they have “not materially complied with its obligations under this contract”. The Practical Completion Certificates referred to 'major defects and other matters. Stuart sought an Injunction to stop Hemmes from calling upon the Performance Bonds, arguing that clause 16.2 was not been satisfied and its notices were invalid. The main focus was whether a serious question to be tried arose between the par-ties as to whether Stuart had “materially” failed to comply with his obligation. On appeal the Court held that the 'material non-compliance' dispute gave rise to a serious question to be tried and allowed the injunction. Absolute clarity for termi-nation should be sought otherwise the other party may have claims for repudiation of contract. Our website provides further information on the broad range of services that we offer our clients. CONTACT US Level 5 Nexus Norwest 4 Columbia Court Baulkham Hills NSW 2153 Australia T: + 61 2 8860 9585 F: + 61 2 9672 6376 mail@resolutelawyers.com www.resolutelawyers.com.au

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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